[Congressional Record Volume 144, Number 138 (Tuesday, October 6, 1998)]
[Senate]
[Pages S11572-S11577]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]


[[Page S11572]]
                        INTERNET TAX FREEDOM ACT

  The PRESIDING OFFICER. Under the previous order, the Senate will 
resume consideration of S. 442, which the clerk will report.
  The legislative clerk read as follows:

       A bill (S. 442) to establish national policy against State 
     and local government interference with interstate commerce on 
     the Internet or interactive computer services, and to 
     exercise Congressional jurisdiction over interstate commerce 
     by establishing a moratorium on the imposition of exaction 
     that would interfere with the free flow of commerce via the 
     Internet, and for other purposes.

  The Senate resumed consideration of the bill.
  Mr. McCAIN. Mr. President, I ask unanimous consent it be in order for 
an amendment to be offered by Senator Graham of Florida with a time of 
30 minutes, 20 minutes on the side of the Senator from Florida, 10 
minutes from the side managed by me.
  Mr. GRAHAM. I would not object, but I add that there be no second-
degree amendments.
  The PRESIDING OFFICER. Without objection, so ordered.


                           Amendment No. 3729

   (Purpose: To require a supermajority of both Houses to extend the 
                              moratorium)

  Mr. GRAHAM. Mr. President, I send to the desk an amendment and ask 
for its immediate consideration.
  The PRESIDING OFFICER. The clerk will report.
  The legislative clerk read as follows:

       The Senator from Florida [Mr. Graham] proposes an amendment 
     numbered 3729.

  The amendment is as follows:

       On page 176, between lines 15 and 16, insert:
       (c) Point of Order.--It shall not be in order in the Senate 
     or the House of Representatives to consider any bill, 
     resolution, amendment, or conference report if such bill, 
     resolution, amendment, or conference report would extend the 
     moratorium under subsection (a). This point of order may only 
     be waived or suspended by a vote of three-fifths of the 
     Members, duly chosen and sworn.

  Mr. GRAHAM. Mr. President, as the amendment clearly states, its 
purpose is to establish to the extent possible under our rules that the 
moratorium, whatever this body decides its initial length will be, will 
be that length and that we will not fall into a situation of a 
``fluid'' moratorium, with efforts each year made to extend it further 
and further. This amendment does not go to the issue of what the length 
of the initial moratorium shall be.
  The bill before the Senate today, which is the product of the Senate 
Finance Committee, provides for a 2-year moratorium. There are 
amendments filed which would extend that up to 5 or 6 years. There are 
no amendments filed which would reduce the period of the moratorium. So 
it is fair to suggest that we will be dealing with the moratorium of at 
least 2 years, possibly longer. The purpose of this amendment is to 
assure to the extent possible that once we have made that decision, 
that will be the decision.
  The underlying premise of this bill is an unusual one for the U.S. 
Congress--not unique, but rarely used. That is, we are about to 
consider legislation which would preempt every State and every local 
government in this country, for a period of time, from exercising their 
otherwise legal powers relative to taxation on Internet access and 
transactions which are undertaken through the use of the Internet. 
While it is perfectly appropriate for Congress to decide that the 
Federal Government should not tax Internet access or Internet 
transactions, I am concerned we will face a proposal that tells States 
and local governments that they shall be denied the right to tax these 
transactions.
  The argument which I find to have some merit is that it is 
appropriate we have a ``pause,'' a period in which we can determine 
what is the appropriate means of taxing this new technology, and that 
during that pause there should be a prohibition on State and local 
governments imposing taxes on Internet access or Internet transactions. 
What I am concerned about is that that pause does not become a 
permanent slumber, an elongated sleep in which there is a prohibition 
on State and local government's ability to exercise what is their basic 
right under our constitutional allocation of responsibilities to raise 
those revenues necessary to support necessary government programs.
  The Federal Government has on many occasions passed legislation which 
conditions the receipt of Federal funds. For instance, in the highway 
bills we have frequently required the States to undertake a certain set 
of actions, such as setting a speed limit or imposing the requirement 
of seatbelts or motorcycle helmets or some other item which the Federal 
Government felt was of sufficient import, that the ability of the State 
to receive its otherwise due allocation of Federal funds would be 
conditioned upon their adopting that policy. But in those cases, the 
States have a choice. If a State believes the Federal requirement is so 
onerous or so misguided that they will reject it, they can do so and 
accept the consequences of some reduction in their Federal funds.
  What we are deciding here today is that the States do not have such 
an option. There will be a prohibition for the period of the moratorium 
on the State's ability to exercise their policy relative to the 
taxation of Internet access or Internet transactions.
  What concerns me about this policy is its potential to ``morph'' from 
being a temporary pause to being a permanent prohibition. What are some 
of the risks that are involved in this? One of those risks is the 
unknown, the unknown potential of this new rapidly developing 
technology having implications to State and local governments which are 
beyond our current ability to comprehend.
  As an example, there is an emerging technology--it is not new, it is 
in place but will probably become more prevalent--which is known as 
Internet telephony which is essentially where the Internet system 
substitutes for the normal local or long distance telephone lines as a 
means of transmitting telephone services. This system, which is 
currently in use on a limited basis, has the potential of being a very 
major competitor with the traditional ways in which telephone service 
has been delivered.
  Probe Research, a telecommunications and data networking market 
research system, forecasts that the demand for Internet telephony will 
make these services add up to a $6.3 billion market by the year 2002. 
That is just some 3 years from now. At that point, according to Probe 
Research, Internet telephone and fax traffic will account for nearly 10 
percent of total long distance traffic, a very significant high-growth 
industry.
  What does this mean for State and local government? 
Telecommunications services and cable services are significant sources 
of revenue for State and local government. The Finance Committee bill, 
in fact, recognizes this by specifically preserving the Federal 
Government's taxing authority over many of these areas and preserving 
the taxing authority of State and local government for access to 
telephone and cable services.
  Unfortunately, the bill is vague regarding the treatment of such new 
technologies as Internet telephony. While it specifically protects 
Federal revenue, it does not clarify that the moratorium does not apply 
to State and local governments with respect to Internet telephony. I 
use this example because it is one that is before the Senate, an 
example that the implications of allowing a specified moratorium to 
become a longer-term prohibition could have implications on State and 
local governments and on the fairness in the marketplace between 
competing forms of commercial transaction, telecommunications, and 
other aspects of our economy that will be affected that are beyond our 
ability to currently estimate.
  A second risk is that this moratorium will become ingrained into the 
law. We have had multiple examples of where laws that were originally 
passed as temporary moratoriums, or as a temporary benefit, have become 
de facto permanent. In fact, before this session is over, we may be 
considering what is referred to as an extender law, which is to add 
additional months or years to a variety of tax benefits which were 
initially adopted to have a specified time to limited life. But once in 
place, once they have developed a political constituency, they have 
become, for all intents and purposes, permanent provisions in our Tax 
Code.
  I am concerned that the same development of a political constituency 
that has gotten used to the fact that they didn't have to pay any tax 
for access, and particularly any tax on Internet transactions, will 
develop here and

[[Page S11573]]

there and will be tremendous political pressure at the conclusion of 
this moratorium, whenever that might be, for its extension.
  Next, the potential of a long-term moratorium merging into 
prohibition would create an imbalance on the commercial playing field. 
I could foresee what is happening in a limited form becoming more 
prevalent as retail stores begin to open a back office Internet sales 
shop in order to be able to participate in tax-free Internet sales. So 
what today is a relatively limited application has the potential of 
becoming a much larger threat to fairness and parity in the commercial 
marketplace and to a fundamental source of revenue for State and local 
government.
  Finally, the potential of the specified moratorium being extended 
would delay or obviate the accomplishment of the very objective of 
having the moratorium in the first place, which is to direct a 
commission, representative of the various stakeholders in this issue, 
to sort out the conflicting theories and practices and give us a 
recommendation for some uniform, fair, nondiscriminatory Federal, 
State, and local policies, as it relates to the use of the Internet as 
a form of commerce.
  So for all of those reasons, Mr. President, I am concerned, and I 
think our Members should be concerned, about the prospect of the 
moratorium, whatever length we finally decide is appropriate, becoming 
a permanent prohibition on the use of State governments and of their 
inherent powers relative to the Internet.
  Finally, Mr. President, I think the period of time that is in the 
Senate finance bill and the period of time that is proposed in various 
amendments should be plenty to accomplish the objective of this study. 
We have had a number of recent commissions that have been given a 
specific time to accomplish their task.
  Two or three years ago, the Congress established an Internal Revenue 
Reform Commission. It gave that commission 18 months to look at an 
agency as complex as the IRS. That commission actually completed its 
work in 15 months, made its report, and this year Congress used that 
report as the basis of probably the most sweeping reforms of the 
Internal Revenue Service in a generation.
  Last year, we established a Medicare Commission to look at one of the 
most complicated, one of the most expensive, one of the most sensitive 
programs that the Federal Government operates, the program that 
finances the health care of some 35 million of our older citizens. We 
gave that commission 18 months in order to issue its report.
  So I suggest that the 2 years that are in the Finance Committee 
recommendation are ample to carry out a much more focused study of the 
tax implications of the Internet and that we should take this step by 
adopting the amendment that I proposed to assure that this moratorium 
will not morph into a permanent prohibition.
  Mr. President, the fundamental issue here is the issue that underlies 
this legislation, and that is the desire to have parity, equality, on 
the commercial playing field among all forms of sales, whether they be 
the Main Street seller or the remote seller or the cyberspace seller; 
second, to assure that the Federal Government will not unduly intrude 
into the areas of historic responsibility for State and local 
government. It is appropriate for us to attempt to establish some 
standards for uniformity of treatment and predictability of treatment. 
It is not appropriate for the Federal Government to preempt State and 
local governments from their ability to exercise what they think is 
appropriate tax policy for their citizens.
  So the amendment would provide that once the moratorium has been 
completed, whatever its length, it would require a three-fifths vote of 
each House to extend that moratorium for a further period.
  I reserve the remainder of my time.
  Mr. McCAIN addressed the Chair.
  The PRESIDING OFFICER. The Senator from Arizona is recognized.


                         Privilege of the Floor

  Mr. McCAIN. On behalf of Senator Mack, I ask unanimous consent that 
Elaine Petty and Nancy Segerdahl, legislative fellows in Senator Mack's 
office, be granted floor privileges during the week of October 5 for 
consideration of S. 1868, the International Religious Freedom Act of 
1998.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                         Privilege of the Floor

  Mr. GRAHAM. Mr. President, I ask unanimous consent that Mary Jo 
Catalano and Heather Landesman of my staff be granted floor privileges 
for the pendency of S. 442.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. McCAIN. Mr. President, I urge my colleagues to oppose this 
amendment. It circumvents the legislative process by requiring a 
supermajority to extend the tax moratorium in the Internet Tax Freedom 
Act, it would bind the hands of future Congresses, and it would start 
setting a rather dangerous precedent.
  Mr. President, the Senate has a supermajority mandate that applies to 
all legislation; it is called a filibuster. Requiring three-fifths of 
Congress to agree to adopt any future actions in this matter is 
unnecessary, when all legislation considered and passed by the Senate 
must essentially meet the test created by the filibuster.
  This legislation before us, the Internet Tax Freedom Act, is an 
excellent example of the proper manner in which legislation makes its 
way to the Senate for full consideration and a final vote. This 
legislation has been fully considered by the Commerce Committee, 
referred to the Finance Committee, and Senator Wyden and I have worked 
hard to address the concerns some Members have expressed.
  S. 442 is before the Senate now, not because any extraordinary 
measures have been taken, but because the bill has undergone the 
legislative process as it was meant to function. This legislation is 
before the Senate today because the majority of Senators support it and 
a filibuster would have been defeated. There is no reason to institute 
a supermajority for future actions on this issue, as Congress is fully 
capable of addressing this issue under existing processes and 
procedures.
  I yield to the Senator from Oregon such time as he may consume.
  The PRESIDING OFFICER. The Senator from Oregon is recognized.
  Mr. WYDEN. Mr. President, I strongly urge my colleagues to oppose 
this amendment. I think we are making substantial progress on this 
legislation. I believe that in a few minutes Senator McCain and I are 
going to accept something like seven or eight amendments that have been 
offered in an effort to try to bring the parties together, and I would 
like to see us continue to work in this spirit.
  Mr. President, and colleagues, I introduced the Internet Tax Freedom 
Act in March of 1997. Since then, this measure has been one of the most 
hotly debated measures in this Congress--debated in both the Senate and 
the House of Representatives. Through the course of this year and a 
half discussion, never once has this idea been suggested--not in the 
House nor in the Senate. And the fact of the matter is we are still 
having important negotiations in order to get at the issue of how long 
the moratorium ought to be. We are anxious to involve the Senator from 
Florida in that effort. It would seem to me that our job--just as we 
have tried to do with the seven or eight amendments which Chairman 
McCain and I are going to accept in a few minutes--is to continue to do 
our work in good faith. The Senator from Florida knows that I have gone 
to considerable lengths to be supportive of his position with respect 
to what would be studied by the commission in an effort to be 
responsive to his concerns.
  I would like to see us continue those discussions, both with respect 
to what the commission will study and how long the moratorium ought to 
be. When we arrive at that point, I and others believe that the 
commission will do a thoughtful and responsible job. We think they are 
going to work in good faith. If at any point they indicate that they 
are unwilling to pursue their duties in that kind of fashion, the U.S. 
Senate can get back at it.
  I think it is important that the Senate reject this amendment and let 
us continue in the kind of spirit that Chairman McCain and I have shown 
with respect to the seven or eight amendments that are going to come up 
very shortly that we have agreed to accept, and let us get this bill on 
the President's desk.

[[Page S11574]]

  The President of the United States is for this legislation, the 
majority leader of this body, Trent Lott, is for this legislation, and 
the minority leader, Tom Daschle, has said that he wants to see this 
bill enacted. I think it is important that we reject this amendment and 
move forward in good faith to work out the remaining issues.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER. Who yields time?
  Mr. GRAHAM. Mr. President, how much time do I have remaining?
  The PRESIDING OFFICER. The Senator has 5 minutes 55 seconds. The 
Senator from Arizona has 4 minutes 52 seconds.
  Mr. GRAHAM. Mr. President, I also add my name to the list in favor of 
the residual purpose of this legislation, which is a pause of 
sufficient length to allow a serious study of the implications of 
Internet technology to be a party in the commercial marketplace, and 
the role of State and local taxation, as well as international and 
Federal taxation on this new technology. The purpose of that latter 
point is to achieve stability, predictability and uniformity in a way 
in which Internet transactions and access is treated and to avoid there 
being a discriminatory set of policies that are contrary to the 
development of their important new technology. I believe the Senate 
Finance Committee bill achieved that proper balance with a 2-year 
moratorium.
  What I am concerned about and what this amendment goes to is for that 
brief pause not to become a permanent prohibition. For the reasons that 
I have already cited--the rapidly changing nature of this technology 
and its application, the potential for a constituency to develop that 
would convert temporary into permanent, the basic unfairness of having 
some forms of commerce subject to tax while others are given the 
benefit of a moratorium, the inappropriateness of the Federal 
Government preempting appropriate State and local judgments for 
protracted periods of time--all have led me to suggest that we should 
add to the 2-year moratorium, as it is currently written, an additional 
protection, and that is at the end of that moratorium, if there is a 
proposal to extend further, that it would take a 60-vote margin and an 
equivalent percentage of votes in the House of Representatives in order 
to do so.
  That would give us some assurance that the objectives that are stated 
will be achieved, but that this will not become the camel's nose in the 
tent where eventually the whole body of the camel will be inside the 
tent. We would be in the position of a permanent prohibition on legal 
and appropriate policy decisions that have and should be made at the 
State and local level for the purposes of maintaining not only fair 
treatment in the marketplace but also the essential resources necessary 
for State and local governments to carry out their responsibilities in 
public safety, education and other critical areas.
  Mr. President, I urge the adoption of this amendment, which I 
consider to be wholly consistent with the objectives of this 
legislation as stated by its sponsors.
  The PRESIDING OFFICER. Who yields time?
  Mr. McCAIN. Mr. President, I ask unanimous consent that the vote take 
place at 5 o'clock.
  The PRESIDING OFFICER. Does the Senator from Florida yield back time?
  Mr. GRAHAM. How much time do I have remaining?
  The PRESIDING OFFICER. Two minutes 42 seconds.
  Mr. GRAHAM. Mr. President, I reserve the remainder of my time.
  Mr. McCAIN. I withdraw my unanimous consent request. I yield such 
time to the Senator from New Hampshire as he may consume.
  The PRESIDING OFFICER. The Senator from New Hampshire is recognized.
  Mr. GREGG. Mr. President, I rise to support the position of the 
chairman of the committee on this issue in opposition to the Senator 
from Florida.
  The proposal which the Senator from Florida is suggesting goes really 
to the essence of this debate, which is whether or not 30,000 
municipalities and State agencies across this country are going to have 
the right to essentially assess taxes in an arbitrary way on one of the 
most dynamic vehicles of commerce that has never come forward in the 
experience of the world. The chaos which those 30,000 municipalities 
and State agencies would create should they be able to assess that type 
of taxation on the Internet would be overwhelming. It might totally 
defeat what has been one of the great engines of economic activity and 
prosperity which our Nation has enjoyed over the last few years.
  It is not a unique situation. We can go all the way back to John 
Marshall to determine that the Congress has the right to make the 
decision on the issue of policy relative to taxation in commerce. It 
was, of course, Chief Justice Marshall who determined that when a ferry 
was crossing a river between two States that that ferry could not be 
taxed by the local State if it was going to interfere with interstate 
commerce.
  This concept has carried through our jurisprudence since that time--
that the Federal Government reserves the unique right to determine the 
taxation of commerce.
  There is no reason why we should arbitrarily handicap ourselves by 
creating a supermajority within our own institution to exercise that 
right, which is what the Senator from Florida is proposing.
  Let's continue the policies which have done us so well in the area of 
tax policy for the last 200 years, which is a majority of the Congress 
to make a decision as to what tax policy shall be in international 
trade. Let's not create some artificial barrier for us to jump over as 
an institution as we try to deal with what is a tremendous real ferry 
that may be created by having 30,000 municipalities and State agencies 
across the country assess taxes against the Internet.
  I yield the floor.
  The PRESIDING OFFICER. Who yields time?
  Mr. GRAHAM. Mr. President, I yield 2 minutes to the Senator from 
North Dakota.
  The PRESIDING OFFICER. The Senator from North Dakota.
  Mr. DORGAN. Mr. President, I may not need the entire 2 minutes, but I 
rise in support of the amendment offered by the Senator from Florida.
  This issue is relatively simple. The whole purpose of a moratorium is 
to take kind of a time-out and establish a commission and review a 
series of these issues. But all of us here know how difficult it is 
going to be when this moratorium, whatever it is, is to expire. We will 
have people coming here saying this needs to be a perpetual thing; we 
will continue the moratorium year after year after year. I want this 
piece of legislation with its moratorium to represent that time-out; to 
give this country time to make the right decisions. But at that point I 
want the decisions to be made, and I want the moratorium to be gone. 
That is what the Senator from Florida is saying. It is a very important 
amendment.
  I hope my colleagues will support this amendment so that we will 
comply with what I think the true spirit of this legislation really 
is--a time-out for thoughtful decisions to be made and then business as 
usual. We don't want permanent preemption of the State's tax base. That 
is what will happen if we don't decide now that this moratorium will 
be--whatever it is. I hope it is 3 years.
  Mr. GREGG. Will the Senator yield?
  Mr. DORGAN. If I have time, I am happy to yield. Of course.
  Mr. GREGG. Wouldn't the business as usual be that the majority would 
take action rather than having a supermajority take place?
  Mr. DORGAN. The Senator misunderstood my business-as-usual comment. I 
was talking about the business as usual allowing a State to describe 
its own tax base in a fair and thoughtful manner. My fear is that this 
moratorium will continue forever, unless it becomes what we think it 
should become--a time-out to make decisions, and then move on.
  Mr. President, I yield the floor.
  The PRESIDING OFFICER. Who yields time?
  Mr. McCAIN. How much time do I have remaining?
  The PRESIDING OFFICER. The Senator has 2 minutes 5 seconds.
  Mr. McCAIN. I yield the remainder of my time.
  The PRESIDING OFFICER. Does the Senator yield the remainder of his 
time, 29 seconds?

[[Page S11575]]

  Mr. GRAHAM. I yield the remainder of my time.
  Mr. McCAIN. Mr. President, I move to table the Graham amendment.
  I ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.
  The PRESIDING OFFICER. The question is on agreeing to the motion of 
the Senator from Arizona. The yeas and nays have been ordered.
  The clerk will call the roll.
  The bill clerk called the roll.
  Mr. FORD. I announce that the Senator from Ohio (Mr. Glenn) and the 
Senator from New York (Mr. Moynihan), are necessarily absent.
  The result was announced--yeas 83, nays 15, as follows:

                      [Rollcall Vote No. 299 Leg.]

                                YEAS--83

     Abraham
     Akaka
     Allard
     Ashcroft
     Baucus
     Bennett
     Biden
     Bingaman
     Bond
     Boxer
     Brownback
     Bryan
     Burns
     Cambell
     Chafee
     Coats
     Cochran
     Collins
     Coverdell
     Craig
     D'Amato
     Daschle
     DeWine
     Dodd
     Domenici
     Durbin
     Enzi
     Faircloth
     Feingold
     Feinstein
     Frist
     Gramm
     Grams
     Grassley
     Gregg
     Hagel
     Harkin
     Hatch
     Helms
     Hutchinson
     Hutchison
     Inouye
     Jeffords
     Johnson
     Kempthorne
     Kerrey
     Kerry
     Kohl
     Kyl
     Lautenberg
     Leahy
     Lieberman
     Lott
     Lugar
     Mack
     McCain
     McConnell
     Mikulski
     Moseley-Braun
     Murkowski
     Murray
     Nickles
     Reed
     Reid
     Robb
     Roberts
     Rockefeller
     Roth
     Santorum
     Sarbanes
     Sessions
     Shelby
     Smith (NH)
     Smith (OR)
     Snowe
     Specter
     Stevens
     Thomas
     Thompson
     Thurmond
     Torricelli
     Warner
     Wyden

                                NAYS--15

     Breaux
     Bumpers
     Byrd
     Cleland
     Conrad
     Dorgan
     Ford
     Gorton
     Graham
     Hollings
     Inhofe
     Kennedy
     Landrieu
     Levin
     Wellstone

                             NOT VOTING--2

     Glenn
     Moynihan
       
  The motion to lay on the table the amendment (No. 3729) was agreed 
to.
  Mr. McCAIN. I move to reconsider the vote and I move to lay that 
motion on the table.
  The motion to lay on the table was agreed to.
  Mr. McCAIN. Mr. President, I ask unanimous consent there now be a 
period of morning business, with Senators permitted to speak up to 5 
minutes each until 6:30 p.m.
  Mr. BUMPERS. I object.
  Mr. President, I send an amendment to the desk.
  The PRESIDING OFFICER. The Senator from Arizona has the floor.
  Mr. McCAIN. Mr. President, I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. McCAIN. I ask unanimous consent that the order for the quorum 
call be rescinded.
  The PRESIDING OFFICER (Mr. Smith of Oregon). Without objection, it is 
so ordered.
  Mr. McCAIN. Mr. President, I ask unanimous consent the Senate now 
move to a Bumper's amendment, with 10 minutes equally divided on either 
side, followed by a rollcall vote if the Senator from Arkansas wants 
it; I will make a motion to table; following that, that the Senate then 
go into morning business, with Senators permitted to speak up to 5 
minutes each until 6:30 p.m.
  Mr. BUMPERS. I add to that, no second-degree amendments be in order.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                           Amendment No. 3742

(Purpose: To require persons selling tangible personal property via the 
 Internet to disclose to purchasers that they may be subject to State 
            and local sales and use taxes on the purchases)

  Mr. BUMPERS. Mr. President, I send an amendment to the desk.
  The PRESIDING OFFICER. The clerk will report.
  The assistant legislative clerk read as follows:

       The Senator from Arkansas [Mr. Bumpers], for himself, and 
     Mr. Graham, proposes an amendment numbered 3742.

  Mr. BUMPERS. Mr. President, I ask unanimous consent reading of the 
amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The amendment is as follows:

       At the appropriate place, insert the following new title:

     TITLE    --CONSUMER PROTECTION TAX DISCLOSURE

     SEC.    . DISCLOSURE REQUIREMENT.

       (a) Disclosure Requirement.--Any person selling tangible 
     personal property via the Internet who--
       (1) delivers such property, or causes such property to be 
     delivered, to a person in another State, and
       (2) does not collect and remit all applicable State and 
     local sales taxes pertaining to the sale and use of such 
     property.

     shall prominently display the notice described in subsection 
     (b) on every other form available to a purchaser or 
     prospective purchaser.
       (b) Disclosure Notice.--The notice described in this 
     subsection is as follows:
       ``NOTICE REGARDING TAXES: You may be required by your State 
     or local government to pay sales or use tax on this purchase. 
     Such taxes are imposed in most States. Failure to pay such 
     taxes could result in civil or criminal penalties. For 
     information on your tax obligations, contact your State 
     taxation department.''
       (c) Regulatory Authority.--The Secretary of Commerce shall 
     issue and enforce such regulations as are necessary to ensure 
     compliance with this section, including regulations as to 
     what constitutes prominently displaying a notice.

     SEC.    . PENALTIES.

       Any person who willfully fails to include any notice under 
     section ____ shall be fined not more than $100 for each such 
     failure.

     SEC.    . DEFINITIONS.

       For purposes of this title--
       (1) the term ``use tax'' means a tax imposed on or incident 
     to the use, storage, consumption, distribution, or other use 
     within a State or local jurisdiction or other area of a 
     State, of tangible personal property,
       (2) the term ``local sales tax'' means a sales tax imposed 
     in a local jurisdiction or area of a State and includes, but 
     is not limited to--
       (A) a sales tax or in-lieu fee imposed in a local 
     jurisdiction or area of a State by the State on behalf of 
     such jurisdiction or area, and
       (B) a sales tax imposed by a local jurisdiction or other 
     State-authorized entity pursuant to the authority of State 
     law, local law, or both,
       (3) the term ``person'' means an individual, a trust, 
     estate, partnership, society, association, company (including 
     a limited liability company), or corporation, whether or not 
     acting in a fiduciary or representative capacity, and any 
     combination thereof,
       (4) the term ``sales tax'' means a tax, including use tax, 
     that is--
       (A) imposed on or incident to the sale, purchase, storage, 
     consumption, distribution, or other use of tangible personal 
     property as may be defined or specified under the laws 
     imposing such tax, and
       (B) measured by the amount of the sale price, cost, charge, 
     or other value of or for such property, and
       (5) the term ``State'' means any of the several States of 
     the United States, the District of Columbia, the Commonwealth 
     of Puerto Rico, and any territory or possession of the United 
     States.

     SEC.    . EFFECTIVE DATE.

       This title shall take effect 180 days after the date of 
     enactment of this Act. In no event shall this Act apply to 
     any sale occurring before such effective date.

  Mr. BUMPERS. Mr. President, this is a very simple amendment. Forty-
five States have sales and use taxes on sales of merchandise coming 
into their State from another State. The problem is, they can't collect 
it because the people who are buying the merchandise don't know that 
there is a sales tax on the goods coming in. I think Maine collects 
about $1 million, and that is probably as much as any State collects.
  People are always getting rude surprises. All of a sudden somebody 
knocks on the door and they say, ``We saw where you just bought $50,000 
worth of furniture from North Carolina. You owe sales tax.'' They say, 
``The ad said no sales tax.'' ``I don't care what the ad says. There is 
a North Carolina sales tax on merchandise brought in from out of 
State.''
  My amendment says on Internet sales, if you sell into a State, you 
must notify people with a short notice that simply says, ``This 
merchandise may be subject to a sales or use tax in your State.'' You 
could be subject to a civil penalty or a criminal penalty--something 
like 100 bucks. If you want to check, you should check with your local 
revenue department to determine whether or not your State has a tax.
  I want every Member in this body to ask this question: Why would you 
vote against this when your legislature has specifically provided that 
sale of goods from across the State lines are taxable? If you say they 
are not taxable, you are flying right into the face of the will of the 
people in your State who said they should be.
  All I am saying, people should not be misled and should be told that 
when

[[Page S11576]]

they buy this merchandise it may be subject to a sales or use tax. It 
is just that simple. Why wouldn't you? If your State is one of the 45 
States that have a tax, why would you not want a company selling goods 
on the Internet--not mail-order houses on the Internet--why would you 
not want to tell the customer he may be subject to it, instead of him 
getting a rude surprise and some auditor knocking on his door?
  I reserve the remainder of my time.
  The PRESIDING OFFICER. The Senator from Oregon.
  Mr. WYDEN. Thank you, Mr. President.
  I strongly oppose this amendment. This amendment specifically singles 
out those who sell goods over the Internet for discrimination. It 
applies to one class of people and that is those who sell goods on the 
Internet. The amendment would impose on those sellers of goods on the 
Internet a new requirement that would not be imposed on someone who 
sells goods over the phone or someone who mails the goods when they get 
a check.
  Now, let's picture the kind of person who is going to be hurt by this 
amendment. My State, the State of the Presiding Officer of the Senate, 
has 100,000 home-based businesses. These are some of the most exciting 
businesses in the country coming up with new products. They are small. 
They are entrepreneurial. If this amendment passes, those 100,000 home-
based businesses in Oregon--and there are thousands and thousands of 
other home-based businesses across the country in States that we all 
represent--they, and only they, will be subject to this new 
requirement.
  This amendment seeks to do what the Internet tax freedom bill seeks 
to prevent. Our legislation is about technological neutrality. We 
should treat the Internet like we treat everything else. It shouldn't 
get a preference. It shouldn't be discriminated against. But if you 
read section (a) of this amendment, you will see that it applies 
requirements to one class of people, and one class of people only. 
Those are individuals who sell goods over the Internet.
  This is discriminatory. This does what our legislation seeks to 
prevent. Those who vote for the amendment, in my view, in this 
Senator's view, are fostering the kind of policy that is going to lead 
to selective and discriminatory activity against those who sell goods 
through the World Wide Web.
  I yield back my time, Mr. President.
  Mr. BUMPERS. Mr. President, I ask unanimous consent that my amendment 
be expanded to include mail-order catalog sales.
  The PRESIDING OFFICER. Is there an objection?
  Mr. GREGG. I object.
  Mr. BUMPERS. The reason there is an objection is because the Senator 
from New Hampshire and the Senator from Oregon do not come from the 45 
States that have sales taxes.
  They are opposed to this because their State is not one of the 45 
States that do have a sales or use tax. Secondly, the unanimous consent 
agreement limits amendments to relevant amendments. If you put mail-
order catalog sales in, it is not relevant. That is the reason I 
confined it to the Internet and asked consent to extend it. That is the 
reason they objected. They don't have to face a legislature or people 
back home who passed a sales or use tax on Internet sales coming in 
from out of State, because their States don't have a sales or use tax. 
My State does have that use tax, and we would like to collect it. Your 
revenue departments and your Governors would like to collect it, too.
  All I am saying is, Internet sales simply ought to state a simple 
thing--that the goods you are buying could be subject to a use or sales 
tax in your State; if you want to know whether it does or not, contact 
your local revenue department. What is wrong with that? Who can oppose 
that? The taxes have already been passed by the legislature. It is just 
that they can't collect it unless they stand at the border and 
intercept every piece of merchandise that comes through the mail or on 
the highway. They can't do it.
  So all I am saying is, if these 45 States have seen fit to levy taxes 
on out-of-State sales to make the playing field a little more level 
with the main street merchants, we ought to give them such help as we 
can. I am saying they ought to at least advise these people that these 
purchases might be subject to a use or sales tax.
  Mr. President, I am prepared to yield back the remainder of my time 
if everybody else is, and we will go to a vote.
  Mr. GREGG. Mr. President, I move to table the amendment of the 
Senator from Arkansas and ask for the yeas and nays.
  The PRESIDING OFFICER. Is there a sufficient second?
  There is a sufficient second.
  The yeas and nays were ordered.
  The PRESIDING OFFICER. The question is on agreeing to the motion to 
table the amendment of the Senator from Arkansas. The yeas and nays 
have been ordered.
  The clerk will call the roll.
  The assistant legislative clerk called the roll.
  Mr. FORD. I announce that the Senator from Ohio (Mr. Glenn) and the 
Senator from New York (Mr. Moynihan) are necessarily absent.
  The PRESIDING OFFICER. Are there any other Senators in the Chamber 
desiring to vote?
  The result was announced--yeas 71, nays 27, as follows:

                      [Rollcall Vote No. 300 Leg.]

                                YEAS--71

     Abraham
     Akaka
     Allard
     Ashcroft
     Baucus
     Biden
     Bingaman
     Bond
     Boxer
     Brownback
     Burns
     Campbell
     Chafee
     Coats
     Cochran
     Collins
     Coverdell
     Craig
     D'Amato
     DeWine
     Dodd
     Domenici
     Enzi
     Faircloth
     Feinstein
     Frist
     Gramm
     Grams
     Grassley
     Gregg
     Hagel
     Hatch
     Helms
     Hutchinson
     Hutchison
     Jeffords
     Kempthorne
     Kerrey
     Kerry
     Kohl
     Kyl
     Lautenberg
     Leahy
     Lieberman
     Lott
     Lugar
     Mack
     McCain
     McConnell
     Moseley-Braun
     Murkowski
     Murray
     Nickles
     Reid
     Robb
     Roberts
     Roth
     Santorum
     Sessions
     Shelby
     Smith (NH)
     Smith (OR)
     Snowe
     Specter
     Stevens
     Thomas
     Thompson
     Thurmond
     Torricelli
     Warner
     Wyden

                                NAYS--27

     Bennett
     Breaux
     Bryan
     Bumpers
     Byrd
     Cleland
     Conrad
     Daschle
     Dorgan
     Durbin
     Feingold
     Ford
     Gorton
     Graham
     Harkin
     Hollings
     Inhofe
     Inouye
     Johnson
     Kennedy
     Landrieu
     Levin
     Mikulski
     Reed
     Rockefeller
     Sarbanes
     Wellstone

                             NOT VOTING--2

     Glenn
     Moynihan
       
  The motion to lay on the table the amendment (No. 3742) was agreed 
to.
  The PRESIDING OFFICER (Ms. Snowe). The Senator from Arizona.


                      Unanimous Consent Agreement

  Mr. McCAIN. Madam President, I ask unanimous consent that the Senate 
remain on S. 442 for the purposes of offering a nonrelevant amendment 
that has been agreed to by both sides, that the amendment be 
immediately agreed to, and that the Senate return to morning business 
under the previous order, except that the time be until 7:30 instead of 
6:30, with no intervening action or debate.
  The PRESIDING OFFICER. Is there objection?
  Mr. DORGAN. Madam President, reserving the right to object. I will 
not object. My understanding is the amendment that is to be offered has 
been cleared with the authorizing committee, and we have no problem 
with the amendment.
  Mr. BYRD. Madam President, reserving the right to object.
  The PRESIDING OFFICER. The Senator from West Virginia.
  Mr. BYRD. I have no intention of objecting. I merely want a little 
clarification on the time. Will that mean we have to wait until 7:30 
and then may have a rollcall vote or so after that?
  The PRESIDING OFFICER. The Senator from Arizona.
  Mr. McCAIN. Madam President, it is my understanding that there will 
not be the likelihood of further votes, but we will have to clear that 
with the majority leader.
  Mr. LOTT addressed the Chair.
  The PRESIDING OFFICER. The majority leader.
  Mr. LOTT. Madam President, who has the floor? The Senator from 
Arizona?
  Mr. McCAIN. I yield the floor.
  Mr. LOTT. We are trying to get final clearance on the antinepotism 
bill. We think there is a probability that we would not have to have a 
recorded

[[Page S11577]]

vote. But that is what we are trying to do right now; we are trying to 
make sure everybody is satisfied with that. If we could get that 
cleared, move it on a voice vote, then we would have no further 
recorded votes tonight. We are not able to announce it at this moment, 
but we believe within the next 5 or 10 minutes we will be able to make 
that clear.
  I see the Senator from Vermont just came on the floor. He was one of 
the ones we were wanting to get some information from about the 
antinepotism bill, being able to take it up, and whether or not a 
recorded vote was going to be necessary on that.
  The PRESIDING OFFICER. The Senator from Vermont.
  Mr. LEAHY. Madam President, I tell my friend from Mississippi, we 
discussed, last night, what we were trying to do, as he knows. The 
Senator from Arizona has been most helpful in trying to help this 
along, to get the antinepotism bill up, but also have the time to do 
the Fletcher nomination.
  What I understand the Senator from Mississippi and the Senator from 
Arizona want to do is to get something locked in so we can take care of 
both those.
  There were some who wanted a rollcall vote on the nepotism bill. Is 
the distinguished leader saying it would be easier for his scheduling 
if there was not one? I came to this conversation late; I apologize.
  Mr. LOTT. I believe it will be better from a scheduling standpoint; 
therefore, we can advise Members what they can expect for the remainder 
of the evening and we can get this legislation completed. Then we will 
be able to go to the Fletcher nomination tomorrow.
  Mr. LEAHY. I ask my good friend, the distinguished leader--and we 
have been friends for a long time--do I detect a hint in that 
suggestion of being able to tell Members there may not be further votes 
if we voice vote the nepotism bill?
  Mr. LOTT. That was very much an implied hint.
  Mr. LEAHY. I think I can tell my friend from Mississippi we can 
overcome those who are requesting a rollcall vote on this side. But we 
do want a specific time for a vote on the Fletcher nomination, and I 
rely on the distinguished leader to work this to a time convenient for 
scheduling. It is, of course, with the understanding that there will be 
a time set down for a vote on Mr. Fletcher that we would be able to 
reach an agreement.
  Mr. LOTT. That is my intent, and, as the Senator knows, I had made a 
commitment earlier we were going to do that. I will keep that 
commitment. It is my intent to have that vote tomorrow, or the next day 
at the latest. We will have a vote on that nomination.
  I thank Senator Kyl also for his effort. I say to all Members, if 
they will bear with us just another 5 or 10 minutes, we will be able to 
make it official that we won't have a recorded vote.
  I yield the floor.
  Mr. BYRD addressed the Chair.
  The PRESIDING OFFICER. The Senator from West Virginia.
  Mr. BYRD. Madam President, I withdraw my reservation.
  The PRESIDING OFFICER. Without objection, it is so ordered.


                           Amendment No. 3743

    (Purpose: To provide support for certain institutes and schools)

  The PRESIDING OFFICER. The clerk will report the amendment.
  The legislative clerk read as follows:

       The Senator from Arizona [Mr. McCain], for Mr. Frist, for 
     himself, Mr. Thompson, Mr. DeWine, Mr. Jeffords, Mr. Smith of 
     Oregon and Mr. Wyden proposes an amendment numbered 3743.

  Mr. McCAIN. Madam President, I ask unanimous consent that the reading 
of the amendment be dispensed with.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  (The text of the amendment is printed in today's Record under 
``Amendments Submitted.'')
  Mr. McCAIN. Madam President, I ask unanimous consent to add Senator 
Smith of Oregon and Senator Wyden as original cosponsors of this 
amendment.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. McCAIN. Madam President, I ask unanimous consent that Senators 
Gregg and Lieberman be considered original cosponsors of amendment No. 
3722.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  The PRESIDING OFFICER. The question is on agreeing to the amendment.
  The amendment (No. 3743) was agreed to.
  Mr. McCAIN. Madam President, I move to reconsider the vote by which 
the amendment was agreed to.
  Mr. BYRD. I move to lay that motion on the table.
  The motion to lay on the table was agreed to.

                          ____________________